The report, which details agreements between more than 75 public universities and third party rights holders such as IMG, Learfield, JMI, Fox, and others, examines the guaranteed rights fees paid to universities for a broad set of multimedia rights and sponsorship assets that can be packaged and sold to corporate brands.

While CRIA’s analysis is limited to agreements with public universities who responded to Freedom of Information Act (FOIA) requests from American City Business Journals, the fees paid by the various rights holders during the 2016-17 academic year total nearly $250 million.

The rights fees paid to the 33 institutions who are members of the Power Five conferences total more than $200 million in 2016-17, averaging more than $6.1 million per institution. The agreement with the largest rights fee, between the University of Texas and IMG, guarantees Texas more than $12.7 million this year. Many institutions can earn even more when revenues meet established thresholds beyond the guarantee.

These payments increase substantially in later years of the agreements, with the average payment to institutions in the Power Five increasing to $8.7 million during the 2023-24 academic year. Among the institutions with the largest future payments are UCLA, who is scheduled to earn $16.7 million in the 2024-25 academic year from IMG, and Kentucky, who will receive $16.0 million from JMI in the 2029-30 academic year.

These figures are dependent on the high degree of confidence that rights holders have in their ability to sell the rights and assets they receive in the agreements and reflective of increased demand from brands for those rights and assets.

So, how did we get here? Why has brands’ willingness to pay increased exponentially over the past several years, to the point that rights holders are willing to pay individual institutions an eight-figure guarantee annually?

As a marketer, I thought it might be fruitful to look beyond these numbers and examine some of the trends that have contributed to brands’ insatiable appetite for college sports.

The Demographics of College Sports Fans

While many brands are attracted to professional sports and mega-events such as the Olympic Games and FIFA World Cup by their ability to reach large numbers of consumers, for college sports, it’s all about the demographics. The majority of viewers and attendees of college sports fall into one of two categories: students/recent graduates or older alumni. Either way, they’ll have a college degree, something only 30% of Americans have. College graduates make more money, and therefore will over their lifetime have a much larger amount of disposable income to spend.

Even college sports fans who have yet to earn their degree are an attractive demographic for brands. Young, 18-24 year-old Millennial students have a longer customer lifetime value (CLV) than older consumers, which is very attractive for firms who want to attract consumers at a younger age and keep them as a customer for years (think insurance, banks, and telecom). Students are also influencers on social media. They have large social networks and are looked upon by their friends to help them decide which brands to trust and what to spend money on. If sponsors can connect with them, they can become evangelists for their brands, potentially for decades.

Efficiency

In today’s fractured media environment, the multimedia nature of the agreements is also attractive to brands. In many professional sport environments, sponsors and their agencies are forced to engage in multiple agreements with various entities in order to secure rights across television, radio, digital, social media, and live events (such as stadium/arena signage and on-court/field promotional opportunities). That takes time and costs sponsors money.

For example, even the largest sponsors of Major League Baseball and their teams are forced to enter into separate agreements with Major League Baseball Advanced Media if they wish to run online promotions or receive other digital rights, such as the ability to use MLB team logos online.

Sponsors entering into agreements with IMG, Learfield, and other rights holders can secure an integrated sponsorship of an institution’s athletic teams inclusive of digital assets, television or radio advertising, and signage, all in one agreement. For brands seeking national coverage, rights holders can package large groups of institutions together in one agreement, making it even easier for brands to make an efficient purchase. They can then quickly start the process of leveraging the sponsorships to achieve business objectives.

Brand Integration

With the rise of video on demand (VOD) services and digital video recorder (DVR) penetration approaching 50% of U.S. households, traditional commercials are largely ignored or simply forwarded through by viewers. However, brand integration, defined by Wiles and Danielova (2009) as “the inclusion of branded products or identifiers through audio or visual means within massmedia programming,” causes a brand to be exposed during the actual event and is increasingly coveted by marketers.

While brand integration has been popularized in reality television (i.e., Coca-Cola and “American Idol,” Starbucks and “The Voice,” and Dunkin’ Donuts and “America’s Got Talent”), live sports events are the original source of brand integration, from Gatorade on the sidelines to Nike on a jersey.

Many college sports events can also provide brand integration unavailable to sponsors of professional sports, in the form of branding on the field of play, on field goal nets, basket stanchions and other desirable locations. These unique opportunities provide sponsors with brand integration that is difficult to find elsewhere.

Breaking through the Clutter

Some professional sports such as NASCAR have struggled with declining viewership and attendance at events, leading to issues attracting sponsors. Even for brands who believe in NASCAR and have supported it in the past, standing out is difficult amongst the clutter, given the vast number of sponsors involved. Recent research we presented at the Sloan Sports Analytics Conference in Boston provided evidence that clutter is predictive of shorter-running sponsorships. Clutter inhibits the success of sponsorships given that it impairs cognition, as research has proven we can only accept and retain so much information, and makes servicing sponsors effectively more challenging.

Seeking to break through the clutter, sponsors of college sports events are able to secure title sponsorships, described by Clark, Cornwell, & Pruitt (2009) as the “crown jewels” of sport sponsorships. From title sponsorships of bowl games to conference championship tournaments to neutral site contests, college sports provide a multitude of the title sponsorship opportunities desired by marketers.

Watching the New York Life ACC Men’s Basketball Tournament as I write this, one can easily see what attracted the financial services firm to the opportunity. The title sponsorship of the tournament, held for the next two years in their home market of New York, provides the brand with the ability to place their logo right on the court at Barclays Center, ensuring the brand is exposed to desirable, well-educated attendees and television viewers in an un-cluttered environment.

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